Managing a business’s finances is not an easy task. Every day, a business, whether small or big, processes financial transactions such as payments from customers, salaries, bills, payments to vendors, etc.
For smooth transaction, a business needs to have a separate bank account that allows them the flexibility to make many transactions per day, does not have any hidden fees or charges, and is easy to apply. A current Account is considered best-fit for the same.
If you are a small business owner and are looking to open a new current account, here are 5 important factors that you must consider.
Documents
In order to open a current account, you will be required to furnish a number of documents. For an easy and quick application process, you should have these documents handy before starting your application process. The exact documents required may differ from bank to bank. However, the most common ones that you will require include the following:
– One identity proof such as Aadhar card, PAN, passport
– One address proof
– Passport size photograph
– Business ownership proof
Fees and charges
Current accounts usually allow an unlimited number of transactions without any additional fees or charges. However, for other services like issuing additional cheque books, not maintaining the average minimum balance requirement, issuing demand drafts, etc. additional charges may apply. So, before choosing a bank account for your business, it is very important to be aware of these additional charges and choose an account that best fits your business’s needs.
Overdraft facility
Most business accounts come with an overdraft facility. Under the overdraft facility, you can spend more money than is actually there in your bank account up to a certain maximum limit. This can be a life-saver for a business when facing cash flow problems such as not getting payments on time. So, before choosing a bank account, make sure that your account comes with the overdraft facility and try to negotiate a higher maximum overdraft limit.
Minimum account balance requirement
Just like savings accounts, many current accounts also require you to maintain a minimum average balance. Failing to do this leads to penalties and other charges. Therefore, it becomes important to be aware of this minimum average balance requirement and the penalties to be paid if it is not maintained.
Interest rates
Although current accounts do not pay any interest, as a business you may require business loans at some point of time or the other for reasons like inventory financing, business expansion, cash flow management, etc. So, before choosing the bank to open your account with, do inquire about the interest rates they charge on business loans. Compare these interest rates with other banks so that when the need arises, you are able to quickly get low-cost financing.
Final words
So, choose a current account that is right for after due consideration of all of these factors. Click here to apply for a current account today.
